Crawshaw to enter into multi-million pound partnership with 2 Sisters Food Group
Published:  26 April, 2017

Crawshaw Group plc has announced today (Wednesday 26 April) that it has entered into a “transformational” supply chain partnership with 2 Sisters Food Group.

Ranjit Boparan, who heads up 2 Sisters’ parent company, Boparan Holdings Ltd, is expected to invest approximately £5.1 million, which will see him take a 29.9% stake in Crawshaw. The businessman has a warrant to acquire a further 20.1% of the group, and has become an advisor to the board. The deal is subject to Crawshaw’s shareholder and takeover panel approvals.

The partnership will allow Crawshaw to acquire fresh meat and other products from 2 Sisters as part of an initial three-year supply agreement. Crawshaw’s customers will subsequently have access to an expanded product range at competitive prices.

Crawshaw will also have the freedom to take supplies of quality fresh meat, poultry and other grocery products from the supply/demand imbalances, preventing food waste.

“This is a great opportunity that complements our corporate social responsibility policy and our aim to reduce levels of quality food that would otherwise go to waste,” commented Boparan. “Our businesses have a significant number of opportunities to work through together in the coming weeks and months.”

Noel Collett, chief executive of Crawshaw, commented: “This is a transformational partnership for the Crawshaw Group with a significant opportunity to offer a greater range and better availability to our customers. This new relationship provides a catalyst to our accelerated growth, both in sales and profitability.

“We very much welcome the 50/50 equity split as it reflects the symbiotic nature of the partnership and aligns both our interests to achieve maximum shareholder value. The two-stage subscription, including conditional warrants, will allow the commercial benefit to be demonstrated as part of the process.”

Crawshaw has also announced that Richard Rose, non-executive chairman of the group, will retire from the board following 11 years as group chairman. He will stand down after Crawshaw’s 28 June AGM and will be replaced by James (Jim) John McCarthy, who joins the board immediately as a non-executive director and chairman-elect.

McCarthy brings with him over 40 years of retail experience, having previously been chief executive of T&S Stores for eight years before the business was sold to Tesco Plc for several million. He then became managing director of convenience at Sainsbury’s, and was most recently chief executive of the Poundland Group plc for 10 years. He is currently chairman of discount retailer UP Global Sourcing Holdings plc and chairman of Wynnstay Group plc.

“The board of Crawshaw is confident of the substantial benefits this partnership will bring to customers, employees and shareholders,” said Rose. “Having worked on this partnership for a while and now seeing it being concluded, I feel that, after 11 years as chairman, it’s time for me to make way for someone new to take the business to a significantly higher level.

“Accordingly, I would like to welcome Jim McCarthy to the board as chairman-elect. His track record speaks for itself, and I am confident that, in him, Crawshaw Group has the perfect candidate to oversee the truly exciting growth opportunities ahead.”

McCarthy added that he was looking forward to joining the company at this exciting time. “I am delighted to be joining Crawshaw Group at such a transformational time for the business. There are clearly significant opportunities for further growth and, together with the 2 Sisters Food Group, we have the ideal partner to create value for both businesses.”

In addition, non-executive director Ken McMeikan will retire from the board at the AGM, making way for Stephen Henderson who will join as non-executive director upon completion of the initial investment.

‘Strategic progress’

In Crawshaw’s full year results, for the 52 weeks ending 29 January 2017, the firm said it had continued to build on its strategic plan. Group turnover increased 19% to £44.2 million, driven by store expansion. Eleven stores were rolled out within the year, taking the total number of trading stores to 49.

“This was a year of strategic progress for the group,” commented Collett. “As a management team, we acted decisively and effectively at the end of the first half of the year to address the price and range initiatives that weren’t resonating with customers. By listening to customers and focusing on the demands of each store’s individual local community, we have seen a sharp recovery in both sales and customer numbers throughout the second half of the year.”

Like-for-like sales for the group improved from -13% in the third quarter to -7.4% in the fourth quarter, and -4.5% in the first 10 weeks of FY2018. This was attributed to the successful implementation of customer-driven marketing initiatives, especially the utilisation of social media.

“The momentum in second-half sales followed the successful opening of our new stores in the first half of the year,” added Collett. “We now have 49 sites in the portfolio, each benefiting from the innovation and expansion within our fresh meat and food-to-go categories. In 2017, we expect to open a further five stores, with specific focus on the fresh meat factory shop format.

“Looking ahead, the momentum build through the last six months has continued into the new financial year, and trading is recovering in line with our expectations. With the business stabilised and, having returned to cash generation, we are returning our focus to the store roll-out programme.”